Information and Consulting

Thursday, January 27, 2011

Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail. This could allow you to go places in half the time it takes to travel by car. For some trips, it will be faster than flying – without the pat-down (laughter). As we speak, routes in California and the Midwest are already underway.
President Barack Obama – The State of the Union Address

Brilliant, spectacular, and a wondrous view of the far horizon of American transportation. Through this simple action plan for connecting American cities we will change the stilted and obsolete systems of private airlines, AMTRAK, and highways crisscrossing the American hinterland (they are all oh-so Twentieth Century). China has them (theirs floats on magnets and in time will be huge - 10,025 km or 6,230 miles), France and much of Europe has them (and it goes under the English Channel), even the totally failed economy of Spain is planning for the largest network of rail lines in Europe (Germany will probably buy the bonds – who else?). In all cases they’ve been built due to the inadequacy of autobahns and freeways – and the easy ability of the “state” to expand existing rail rights-of-way and add needed capacity. For a good biased discussion go to High-speed Rail at Wikipedia.

The key is, of course, the ability to interconnect major and sub-major cities and their downtown urban cores to the rest of America. Those pesky airports, especially now with their security issues (as the president pointed out), are just too inconvenient and too far from urban centers. And besides they are locally owned through airport authorities and the states and the feds aren’t getting their fair share. And again, it’s those stock owner airlines that can’t seem to make money (at least until recently). And besides who needs choices when it comes to airlines, one’s as good as the other; right Southwest? So, we’re from the government and here to help, and that farmer in Iowa would love to help pay for your train system.

High-speed rail comparisons with automobiles allows for all sorts of statistical games: throughput, capacity, double-decking, land use efficiency, speed, time utilization, energy efficiency, it’s “greener,” and it’s way-cool. What I really liked about the Wikipedia article was the lack of any numbers on how much these systems will cost. They talk about the venue and menu but not the bill.

In California the initial cost for the San Francisco/Sacramento to Los Angeles/San Diego route is about $50,000,000,000 (I like to type zeros). Like the Bay Bridge estimates, I think I can safely double that to $100,000,000,000 (or more). With our state population at 37,000,000 and with 13.5 million households, this is $7,400 per household to own the debt for the train system. At least airline passengers pay for airports through ticket sales. The high speed rail system can never charge the rider what it will really cost to ride the train. And unlike the freeways or the airlines, when a train with space age technology breaks down in the middle of Kern County, nothing and I mean nothing will go north and south for a long time and the system will back-up to Tijuana and Chico.

But it’s sustainable you say, it’s efficient, it’s “Green.” Baloney. There is inadequate electrical power to supply the power to run the trains (imagine the land covered with wind farms to run the thing – and what happens when the wind dies down?). Solar would require paving most of the desert to supply the kilowatts (no trains at night!). No, the only source that will work is the addition of nuclear plants to supply both the rails and roads (remember the cute Leaf, Tesla, and Volt are coming – and besides why don’t they name these cars with real powerful names like: Thor – God of Lightning). Yes, the future is electric and I support that, but what do you pay for first?: the rights-of-way, the track and stations, the underground tunnels or overhead tracks, the additional high tension towers through the state, the costs for Redevelopment Agencies to clear private property and build new stations, the new nuclear power plants, and the expansion of urban transit systems to bring you to and from the stations. It is the gift that keeps on giving. Just a few side notes: the cost to build a 4 lane rural interstate road is about 5 million dollars per mile. The cost to build the high-speed rail line equates to building 20,000 miles of freeway (that’s about 28 new freeways north to south), or 4,000 high schools, or 10,000 elementary schools, or 100 huge colleges. It could hire 66,000 police and/or firemen or 100,000 teachers (all fully served with benefits). It could also allow businesses to keep billions in wasted funds (through bonds and taxes) to hire thousands of employees to compete with the world – at really good salaries.

It is a world of dreamers and futurists, and President Obama is the head cheerleader. But the American worker and his children are the ones that will buy the tickets, and I’m afraid the trip will not be that good or the ride that smooth.

Friday, January 21, 2011

A brief prelude: Almost seven years ago to the day, I started working on a major redevelopment proposal for the south side of Stockton, California for a client. This potential project included almost 100 city blocks. The goal was to transform these properties into a rich and vibrant area of the city. The concepts and studies were paid for by private development interests. It was also a project within properties controlled by the City of Stockton’s Redevelopment Agency. There were hundreds of parcels, hundreds of property owners, many owners were known - many unknown.

One early foggy winter morning I was taking a drive-by survey of the area, more of a snapshot view than a parcel by parcel study. Lot after lot and house after house of vacant properties, derelict yards, abandoned cars, and (from police reports) crack houses and worse lined many of the streets; all were within five blocks of the downtown business district of Stockton. What really struck the heart, and still does today, was the sight of a young boy, crisply dressed, huge backpack, and baseball cap climbing down a set of broken steps fronting a decrepit shell of a house and beginning his walk to school about five blocks away. Disconnected youths stood on the corners, even at 7:45 and pit bulls stood behind chain-link watching the boy, marking him. No future was living in these buildings, no-way-out barred the door, and depression sat on the curb taking a tote.

The current debate (really a very serious battle) is now beginning over the existence and future of Redevelopment Agencies in the state. The cynics say it’s really a bone-toss to the teacher and employee unions to find more money for their coffers (It’s the schools and firemen – please help!). And from the other side come the constitutional arguments about the sanctity of property rights and the heavy hand of big brother (Ma’am were here to take your house - for a WalMart!).

The redevelopment agencies, with great aplomb, point to their successes such as the Disney Theater complex area (Bunker Hill) in LA, Hunter’s Point and Yerba Buena Center in San Francisco, most military base closures, and hundreds of other local projects, many successful, some not. Without some form of governmental assistance most, if not all, of these developments would not have happened.

California’s 425 redevelopment agencies were born during the post-WWII years through legislative actions at the state level to assist in the revitalization of run-down urban districts. Acquisition and construction bonds are repaid through the growth of the revitalized area’s property tax revenues. This increase in property tax values, the “tax increment,” is then captured by the agencies to pay off the bond debt. These agencies are not “local government” but extensions of the state, though local and operated locally. In effect a parallel “government” within a city or county. When they dance together things are great, a prom if you will, but when they don’t – bitterness and spurned lovers result – a body tossing rave.

Our urban areas face incredible difficulties during the next twenty years: increasing populations, aging infrastructures, aging populations, growing families (especially in urban areas), and burdensome costs and taxes. The life expectancy of most Western structures is forty to fifty years (this is not old world Europe – it’s just a fact), and our mid-century Twentieth Century California growth now requires substantial redevelopment and reconstruction. Towns that were hundreds of small parcels need to be agglomerated into substantially larger parcels for new retail, offices, and residential complexes. Few private interests have the resources and political skills to accomplish this – they know how to build that’s why their called builders – not agglomerators. This is where redevelopment agencies have stepped in to help present, to the development community, lands that are a sum of parts – not just pieces to be dealt with one-on-one.

I go either way with respect to these redevelopment agencies, sometimes they seem professional and have focus, other times they seem like just another governmental agency going through the motions of looking important and as a result never accomplish much. Should their funds be shifted to state coffers? Think about how those “revenues” from the state’s institutionalized gambling racket has “helped” the schools. Should more tax funds return directly to the state (remember that these redevelopments have created tens of thousands of jobs and billions in retail sales), should they cease to exist, should city’s become the redevelopment agency itself (imagine the graft and political corruption that would bring)? I am a social and financial libertarian of the Austrian School but like the atheist in a foxhole, I do have a broader less dogmatic view of this debate.

Again I go back to the boy walking the mean streets of Stockton in the foggy gloom: Who is his champion, who is his mentor, where is his future?

Thursday, January 13, 2011

A client has asked for an analysis and examples of various housing types we may propose for a large project that might even become a master planned community someday (see my Are master Planned Communities Dead?). What started out as an exercise of product and density types has now led to a serious discussion and speculation about the future of housing densities in general. What will the buyer in 2016 want? What can they afford? Why would they even buy a house? Will they rent or purchase?

As I have discussed in previous blogs, I am a true believer in demographics and growth. This is consistent with other writers such as Joel Kotkin, Wendell Cox, Aaron Renn, and a new information source Neil Howe and Richard Jackson. These writers continual go back to the base precept: growth in the United States will continue. Unlike Japan and Europe and to some degree China, who all will suffer from aging and non-expanding populations, America will continue to grow through immigration and internal birth rates. Maybe not at the Boomer rates of the 1950s, but at an expanding and sustainable rate. The future of housing is bright but difficult to see through the current economic fog.

So how will the new American home differ from the past? If we look at the historic residence of one hundred years ago, especially after the Civil War, the middle to upper middle class house (other than its technologies) was similar in size and square footage. The urban lot sizes tended to be smaller, but not always. Riverside, Illinois with its large lots set a market tone; but it too ran into a market crash that affected its completion. The row house for the working population went up by the thousands in eastern cities to support the new mills and factories (mostly rental). The detached and semi-attached stacked flat appeared. The homes planned and built during the 1920s (an era not unlike 2003-2007) were typically lots of 4,000-6,000 square feet (sf) and the house 800 to 1,200 sf. Many of these still stand on the west side of San Francisco and the nearer suburbs of Chicago and New York. The basic numbers haven’t changed that much. And remember these were built four and five at a time; there were no KB Homes, Lennar, and DR Hortons out there.

The trends today are all over the place. The housing density depends on where you live, as it always has. Typically the closer to the urban city center the housing is, the smaller the lot and denser the housing types. These will range up to hundreds of units per acre with a high rise building in the urban center itself. But the conversation with the client is about the third and fourth urban rings of growth from the urban center not the immediate core or adjacent lands that are now redevelopments and reuses of older urban land uses. These areas are the marginal new suburbs and, while in-fills, they tend to be denser and more vertical than the suburbs of the 1960s and 70s. Podium housing (residential on a deck over parking) is not profitable or even marketable here. Vertical mixed use is a planners dream and totally unworkable. Lifestyle is one of the keys as well as value, price, and, as always, location.

The buyer or renter comes to the marketplace with a predetermined idea of his ideal residence. A future resident from Manhattan has a very different idea of their personal heaven then someone from Denver or the San Fernando Valley. They all make decisions based on their own personal habits and needs. Kids are fewer than when I grew up in the 1950s. We collect more things (even in these times of austerity), want more entertainment space, beds are bigger (figure that one out for yourself), so some rooms are larger and others smaller or are no longer needed. Storage, cars, and as George Carlin said “Stuff.” My simple projection is that there will be little difference in the overall type and density than what we have built during the last one hundred years. We are not going back to the communal longhouse, public baths, and living in three rooms over the store. In the future of growing populations and urban densities, privacy and attached separateness will be very important to retain some sense of personal sanity and family.

These are some of the trends and product types we discussed:
 Urban infill clusters of lots on private and secured streets. Now called in the builder jargon six-packs, eight packs or courtyard clusters, these will feature detached homes, 1200 to 1500 sf, garages, two stories, with heightened security and monitored access. Outside space is minimal but adequate. Properly done these could also focus on seniors and possible rentals. Density: 10 to 14 units per acre, in sets of ten to twenty integrated complexes.

 Detached row homes on private streets. These will be dense with small lots in neighborhoods with internal and private open space. Lots will be 2500 to 3000 sf. The houses may reach 3 stories for some markets to push up the square footage. Again a garage will be important for the buyer, most will be alley accessed. Density: 8 to 12 units per acre, these tend to be neighborhoods of at least 50 units.

 Urban courtyard cluster: This is a variant of the alley cluster that allows the fronts of the houses (detached and attached) to face an interior private garden space. Lots are 1800 sf to 2400 sf, the green court is about 10,000 sf. Density: 10 to 12 dus per acre, sometimes denser depending on the house width.

 In rental I see a rebirth of the two story walkup garden apartment, lots of common space and amenities. These may be large enough to encourage seniors to replace their house with an apartment.

 I still believe the old standard 4500 to 6000 sf lot has merit, especially in the third and fourth rings of suburban expansion. These range from 55’ x 80’ to 60’ x 100’ and many variants between. Wide shallow, zero lot line, shared easement all fit in this box. House sizes are all over the place from 1200 sf to over 3500 sf depending on the market. While the neo-traditionalists may whine about the product, they still are the primary money maker in the industry and will be important in the rebirth of the industry.

Affordability will be the initial key to a resurgence. How this is achieved will be the critical. Cheaper land, lower fees (in a time of city government needs), smaller footprints, higher density, lower shared costs (such as HOA facilities and services), and more efficient construction methods will be important parts to the future cost of housing formulas.

Friday, January 7, 2011

The population of California in 2010 reached 37,254,000 souls. This is a 10% increase over its population in 2000 or about 4 million people. We are ranked 13th in national density with 239 citizens per square mile (it’s a big state and there's lots space between us – except of course where you live). The state is projected to have 42.2 million people in 2020 and 46.4 million in 2030 (government projections - take them as you will). If these new 9 million people were to form their own state it would rank as the tenth most populous in the nation.

Today the majority of Californians, in fact the far majority, live within 50 miles of the Pacific Ocean and in fact, more like 30 miles. This coastal population is almost 25.7 million people with the split at 8.1 million north and 17.6 million south, a two to one split. The state has 163.7 thousand square miles. The 30 mile band of coastal paradise may not total 11,000 square miles, less than 2% of the state’s area. California will grow over the next twenty years by almost ten million people and is projected to grow to fifty million by 2050, this growth equals the current population of Los Angeles and Orange Counties combined.

This missive isn’t about the differences between the north and the south, culturally they are so similar (outside of some snooty northern Californian’s opinions about LA), that the discussions about their potential separation are moot and in fact, humorous. The real and most tragic difference is the cultural, economic, and educational extremes between the coast and the rest of the state. Sure there are pockets of charm and financial strength in the rest of the state, but these are extremely small and survive on the largess of the coast. It’s now a story of east and west, the haves and have-nots, the self-appointed elites and the desperate, the disconnected illegal and the prosperous patrician.

This coastal band of counties and cities have built bulwarks around their communities and pulled legal shrouds over their collective heads and, as a result, forced development needed to supply the basics for this incoming generation of residents into the rest of the state. This has been the natural course of American growth in the latter part of the twentieth century, like it or not. Remember cities, with few exceptions, only plan for the future, they do not build. Their exposure is to paper and maps, not to wood and steel and the marketplace.

As I have noted before in other blogs, the coastal communities must, in fact, welcome more people into their communities – period. This must be through changes in underlying zoning and density, increased height limits (the maximum four story structure must be put to rest), expansion of roads and infrastructure while at the same time increasing efficiency and standardization. The marketplace and the strength of the economy will determine whether residential development is rental or ownership, this buy/rent relationship will always be in a state of flux. The real issue is the unit itself and where it is built.

I came across Victor Davis Hanson’s blog called Two Californias the other day which brought this home in a new and frightening way. I have planned and designed communities throughout California for the last thirty years and Mr. Hanson’s observations about the Central Valley and the coast strike close to the heart. I have worked in these Central Valley communities, planned their neighborhoods, and listened to many city councils - all desperate to improve their small bit of California. But now within the state the strength in the soul seems to be slipping, an acquiescence to fate, a palpable bitchiness, and an almost tribal fear resulting in paralysis is growing. Gangs are now moving into suburban areas, meth labs are found throughout the countryside, and a real dumbing down of the population during a time of a manic need for education. There is a need to grab on and hold tight – the Golden State needs a new sunrise.

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About Me

Greg was born in 1949 in Traverse City, Michigan. Raised near Chicago he moved to California in 1971. The son of a journalist and entrepreneur, Greg has never forgotten his roots; his non-fiction work has focused on the Midwest region. Californian by choice, Mr. Randall makes his home in Walnut Creek, California with his wife, constant companion, and business partner. His preferred fiction genre is mystery/thrillers and historically based novels.